Skelos, Silver invest to pad campaign accounts

Two of New York’s most powerful lawmakers have bolstered their massive campaign accounts by investing millions of those dollars in municipal bonds and companies, some of which have business before the state and have made campaign donations to the legislative leaders.

Democratic Assembly Speaker Sheldon Silver has collected $41,571 in dividends and interest in the past six months from the more than $2 million his campaign has invested in 100 companies through mutual funds, according to elections disclosures reviewed by The Associated Press. Republican Senate Majority Leader Dean Skelos has more than $700,000 in investments in bonds as part of $2 million in investments, a fund built up over 20 years, according to a list provided to the AP by his campaign.

Both campaigns note that the investments are legal and neither leader has been accused of a conflict of interest. Silver’s campaign says the lawmaker has no input in how the funds are invested.

Sharing political wealth is one of the key roles of legislative leaders, who continue to amass campaign funds even though they have little or no need for the money to retain their seats. It’s also a way they solidify power in chambers they run with near complete control: With big bank accounts, they spread the largesse around to endangered or underfunded colleagues, who in turn select a leader for their members every two years.

Investing campaign money is not prohibited by state or federal law, but the practice is rare because of the appearance of conflict of interest, other ethics concerns and because politicians who do it have to be so deeply entrenched that they can spare money to invest.

While law requires elected officials to disclose all the companies where they make their personal investments, their campaigns are not required to give detailed disclosure — only the sum they reap in returns. This has raised concerns among government watchdog groups who say powerful incumbents are already protected in myriad ways.

The Federal Election Commission said as far back as 1999 that investing campaign funds in the stock market, often in blue chip stocks with substantial public business, is legal. A federal law enacted this year makes members of Congress and their staff subject to insider trading laws after senators and their staff beat market returns by 6 percent and House members and staff beat the market by 12 percent, said Craig Holman of the government watchdog group Public Citizen.

He sees parallels in New York.

“It’s the same insider trading,” Holman said. “An officeholder is privy to inside information, especially if they are going to introduce legislation that could impact an industry.”

Nationally, the discussion about campaign financing has centered on the Supreme Court’s decision in the Citizens United case to uphold limitless political donations from corporations. But that’s largely been a debate about where campaign cash comes from, not what’s done with it.

Counting the investments, Silver, from Manhattan, nearly doubled the $2.8 million in campaign cash he reported in this month’s state Board of Elections filings. Campaign finance records show the investments include companies that have state contracts, lobby lawmakers on legislation, are headquartered in New York and pay taxes, have charities regulated by the state, or are regulated by the state. Most also make campaign contributions. They include Verizon Communications, IBM Corp., General Electric Co., PepsiCo Inc., Abbott Laboratories, Goldman Sachs, JPMorganChase, and Bank of America.

Verizon’s “Good Government Club” contributed $2,500 to Silver in 2008. JPMorganChase, which handles many of his campaign’s investments, is a regular contributor with $5,000 in direct contributions in 2008-09, and Silver received $5,000 from GE in 2006-10.

In the Senate, Skelos’ campaign says $717,319 is invested, adding to the $2.1 million reported in campaign records. The investments are in bonds purchased in borrowing by local governments, school districts, hospitals, libraries and public works, according to a list the campaign provided to The Associated Press. State records show the campaign received revenue in the form of 14 dividends and interest payments from investments through the investing firm of UBS Financial Services, based in Melville, part of Skelos’ Long Island district. The Republican reported just $80 in revenue in the last six months.